Why Students And Taxpayers Are Subsidizing College Sports — And How We Might Fix It

America’s colleges and universities used more than $2 billion in student fees — an average of more than $500 per student — to subsidize rapidly growing university athletic budgets, as Ohio University professor Richard Vedder wrote at BloombergView today. Those fees can top $1,000 a year at some schools, and as Vedder writes, reliance on them ends up making college more expensive for students and often places the burden on the poorest students. And most of the time, students don’t even know they’re paying the fees.

In addition to student fees, athletic programs are relying more on money from general university budgets, so taxpayers are also spending millions of dollars a year to cover shortfalls as athletic budgets continue to grow faster than academic budgets. But as Vedder noted, and as this chart from a study by the Delta Cost Project shows, that isn’t happening at the biggest, richest athletic programs, with a few notable exceptions. Rather, it becomes a problem in the bottom half of the Football Bowl Subdivision (formerly Division I-A) and gets worse in the Football Championship Subdivision (formerly Division I-AA) and at non-football Division I schools:

That may make it seem like we’re dealing with two separate problems when we talk about college sports, then: one at the biggest schools, where amateurism and paying college players is the biggest issue, and another at the smaller schools, where rising budgets and increased student subsidies are the biggest problems. But those problems might actually be linked, because as Sports On Earth’s Patrick Hruby has reported, amateurism and tax-exempt statuses of athletic departments have increased costs and inflated budgets at the biggest schools. Small schools don’t have to keep up dollar-for-dollar, but the inflation still trickles down because they operate in the same market when it comes to recruiting, facilities, and coaches. Unlike the large schools, though, they don’t have TV networks and revenue streams to cover the growing costs.

Defenders of the NCAA status quo aren’t wrong when they assert that smaller schools probably can’t afford to operate in a system that compensates players. But is that really a bad thing? Ending the amateurism ruse would separate the athletic departments that can afford to participate in such a system (and despite their claims, most of the biggest schools can) from those that can’t compete in a system that includes schools like Texas, Kentucky, and Ohio State. That reality would let smaller schools exchange the big-budget recruiting trips, the expensive cross-country game travel, and the shiny new facilities of the current system for a model that treats intercollegiate sports like the extracurricular activities NCAA defenders say they are. Because while the big business of college sports is thriving at the top and would continue to do so even if athletes are compensated, treating sports as a business clearly doesn’t make sense in the middle or at the bottom of Division I. Right now, though, there’s more incentive to ask for subsidies than to accept a scaled-back athletic program.

Schools argue that they use sports to attract students, and thus subsidizing sports is a smart use of their resources. But that doesn’t really work. Data show that national championships boost enrollment, but most of these small schools aren’t competing for national titles, and Vedder notes that 72 percent of students in a recent poll said sports had an “extremely unimportant” or “unimportant” role in their school choice. So if Florida Gulf Coast is relying on a lightning-in-a-bottle Sweet 16 run every March to survive as a school, or if Appalachian State needs a once-in-a-lifetime upset to attract students, that’s an indication not that they need sports but that they’re running a misguided operation. And fleecing unwitting students and taxpayers to prop up a bad business model doesn’t make any sense at all.